Red-Light District Dims as Zurich Bankers Curb Spending

A prostitute walks past so-called "sex boxes," opened in 2013 with the aim of getting prostitution off Zurich's street. Like the finance industry, the sex industry has opted for a lower profile on the outskirts of town. Photographer: Fabrice Coffrini/AFP via Getty Images

Aug. 29 (Bloomberg) -- Zurich’s red-light district is
dimming. Bankers who have been core patrons of the city’s sex
industry and cabarets are curbing spending.

The venues of Langstrasse -- or long street -- are closing,
replaced by hipster bars, techno clubs and even a backpackers’
hostel. Like the finance industry, the sex trade has opted for a
lower profile.

“Times have changed,” said Kevin Joliat, the manager of
the Petit Prince nightclub in central Zurich. “Bankers really
have to show who the client was, why they spent the money and
was it really necessary,” said Joliat, who once worked at
Zuercher Kantonalbank, Switzerland’s largest state-owned bank.

The decline of erotic entertainment highlights a changing
culture in Zurich as banking jobs ebb and public opinion turns
against inflated bonuses. That and smaller budgets for
entertaining customers have deprived the clubs and bars of a key
customer base.

Bank rules on expenses have become stricter, said Balz
Stueckelberger, head of the Employers Association of Banks in
Switzerland, which is based in Basel.

“People use a more targeted approach now, with more
processes and rules,” he said. “Nightclubs don’t feature in
those.”

Banking Bust

While police in New York cleaned up Times Square and
London’s real-estate boom overwhelmed the Soho district,
Zurich’s red-light district has been hit also by the fallout of
the 2008 banking bust. That’s when UBS AG, Switzerland’s biggest
bank, was bailed out by taxpayers. Since 2009, the number of
full-time financial-services employees in Switzerland has
dropped by 6,000 to 105,000, Swiss National Bank statistics
show. Banking’s share of the national economy has also declined,
according to researcher BAK Basel.

Street prostitution is allowed in the city at stipulated
times and areas. Every sex worker requires a police permit,
according to a city-issued prostitutes handbook.

From a peak of 252 brothels in 2011, there were 160 at the
end of 2013, said Judith Hoedl, a police spokeswoman. The number
of prostitutes arriving in Zurich fell last year for the first
time since at least 2010, she said.

Restaurateurs are feeling the pinch, too.

Bankers -- who once ordered a la carte, drank wine, cognac
or grappa and tipped generously -- now often opt for mineral
water and set-price menus, said Sepp Wimmer, who runs the
Zunfthaus zur Waag restaurant, about 50 meters from Paradeplatz,
the heart of Zurich’s banking district.

“People go all-out less than before,” he said.

Backpackers’ Hostel

The Langstars backpackers hostel, which opened in 2011,
highlights the changing face of Langstrasse. Flanked by strip
clubs and brothels, the hostel’s bar offers live music catering
to young travelers.

Langstrasse is just under a mile long in a traditionally
working-class area that borders tracks running into the central
rail station. Soldiers from a nearby army barracks that closed
in the 1980s had helped brothels and strip clubs flourish; they
were supplemented by bankers during the boom years.

Surging drug use prompted a clean-up that began in 2000 and
included zero tolerance of dealing in public or private
courtyards, and greater oversight of sex businesses.

“Just while standing here we would have been asked several
times if we wanted to buy something and there probably would
have been someone sitting right here, shooting heroin,” said
Alexandra Heeb, a police official, gesturing toward a wall
opposite Restaurant Sonne, one of Langstrasse’s most established
meeting places for escorts and their clients.

Cabaret Dancers

The exotic dancers at the Night2000 Cabaret say clients
aren’t throwing money around like they once did.

“It’s hard work; you always have to negotiate,” said
Jenny, a 38-year-old Thai dancer in a black halter-top dress.
“A couple of years ago it was big bucks,” she said, with
patrons buying champagne starting at 390 francs ($430) a bottle.

In addition to declining patronage by bankers, Zurich’s
cabarets -- basically strip clubs -- have been closing because
of higher costs compared to Germany and France and competition
from so-called sauna clubs, said Maurus Ebneter, a spokesman for
Asco, an association of Swiss cabarets. Sauna clubs are large,
out-of-town brothels that charge an entry fee for access to
pools, showers and saunas in addition to the cost of engaging
the sex worker.

Drive-In Service

To move prostitution away from residential areas, the city
tested sexboxes -- where garages are adjacent to small cabins --
in a desolate industrial area in August 2013. The experiment was
deemed a success, city officials reported this month, though
prostitutes earned less because they were removed from the
nightlife of the center.

While all that has lured away a chunk of the client base
for cabarets, Ebneter says they’ll continue to be in demand.

“I’m convinced that there is still place in Switzerland
for a couple of dozen cabarets,” said Ebneter. “Who goes to a
sauna club with his business customers?”

Joliat, Petit Prince’s manager, said his club targets well-heeled older clients: bankers, lawyers and entrepreneurs.
Anonymity is highly valued. Petit Prince has a selective door
policy for escorts, letting in those who are nicely dressed and
friendly, he said.

“No one has to know what they are doing,” said Joliat.
“What goes on inside, stays inside.”